A “return to basics” approach appears to be bearing fruit for Norseman Gold (LON:NGL, ASX:NGL) , which said it had seen a “dramatic” reduction in costs since the turn of the year.
It follows the appointment in February of the Tulla Resources Group to manage the company’s Norseman Gold Project in Western Australia.
Production activity is currently focused on the North Royal open pit, with the aim of generating positive cashflow from the operation, the group said.
The current mine plan has identified a 200,000 ounce indicated JORC resource at six grams per tonne and the same again in the inferred category, it added.
The Harlequin underground mine, meanwhile, has consistent gold production with a new mine plan and schedule being implemented to increase gold production, Norseman said.
Output for the quarter to the end of March was 6,258 ounces. However the strategy is to become a 100,000 ounce gold producer within one year.
Since the end of the quarter production has increased and the mill is currently operating 24 hours a day, seven days a week, the company reported.
Norseman’s also said it aims to increase its resource base through mine and regional exploration. The current resources inventory stands at 3.4 million ounces of gold at an average grade 4.7 grams per tonne.
Chairman David Steinepreis said: "We are making strong progress at Norseman and our partnership with the Tulla Group is already beginning to impact positively on performance.
“As a result of the restructuring conducted over the first quarter, we have already dramatically reduced our costs and the mill is now working 7 days a week and 24 hours a day.
“The restructuring is on-going and we continue to look to build the current resource inventory.
"We look forward to working further with the Tulla Group and realise the potential of the Norseman Gold Project."
Tulla is taking part in the placing of 64 million shares at 6 cents (4 pence) and 32 million warrants exercisable at 12 cents to raise A$3.84 million of working capital.
Tulla’s stake will increase to 18.93 per cent from 7.15 per cent as a result of the cash call.
Cash balances as at March 31 were A$11.4 million. Around A$6.1 million is committed to cash-backed environmental bonds, the company said.
The Norseman mine is Australia’s longest continuously running gold operation.